Effects of new policies on foreign-invested groups

February 08, 2023 | 10:09
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Foreign-invested enterprises are making a comeback and on the way to recovery after the extremely difficult last few years.
Effects of new policies on foreign-invested groups
Pham Duy Khuong - Managing director, ASL Law

In order to support goreign-invested enterprises (FIEs) in Vietnam, the government has issued new policies that have recently taken effect to attract capital and help FIEs continue to recover and contribute to Vietnam.

First of all, the Law on Insurance Business (LIB) took effect in January. If the previous version was not based on the specificity of each enterprise, the new taking-effect law is evaluated to have changed the method of financial management, allowing the determination of capital or management on the business according to the specific risks of each enterprise.

Therefore, insurance businesses can have more strong corporate governance to develop and achieve a good financial position, and FIEs with poor financial and risk management have the opportunity to obtain a better adjustment on management.

Moreover, having clear regulations on information disclosure helps the insurance market to be transparent and develop fairly. In addition, in compliance with World Trade Organization commitments and free trade agreements that Vietnam has joined and signed, the LIB has added provisions thereby allowing foreign investors to own all the charter capital in insurance companies.

The LIB also minimises unnecessary administrative procedures, especially abolishing the requirements to approve the opening, closing, and changing locations of branches and representative offices as well as replacing these requirements into the form of notification to the Ministry of Finance (MoF) before these changes occur.

This creates convenience for FIEs when carrying out procedures with state agencies, avoiding inconsistencies in application which used to lead to barriers for insurers.

Another highlight of the law is to create favourable conditions for insurers to design and create insurance products with only having to register with the MoF the method and basis for charging insurance premiums, life insurance, health insurance, and motor vehicle insurance (except compulsory insurance).

Accordingly, this is one of the bright spots of the law to help insurance businesses, including FIEs, avoid barriers and increase their initiative to enhance their own insurance products with the purpose of developing their own business.

One of the other issues that foreign investors care about when putting money into Vietnam is intellectual property rights (IPR). Accordingly, the revised Law on Intellectual Property (LIP) also took effect in January. In particular, the revised law focuses on seven major policies, including policies affecting the IPR of FIEs in Vietnam.

The law continues to improve the provisions related to procedures, reduce the components of documents and the taken time when registering IPR, even in the case of automatic establishment of rights without having to register as in the area of copyright or related rights.

This makes the registration process quicker, more convenient, and more transparent, which encourages FIEs to increase IPR registration in Vietnam.

Accordingly, becoming more transparent and in compliance with international commitments is a solid basis for FIEs when investing in Vietnam to protect, exploit, and enforce their IPRs against the acts of infringements and violations.

Therefore, some notable provisions include allowing organisations and individuals to register copyright or related rights through the online system; or adding regulations relating to simplifying industrial design descriptions when conducting the registration procedure.

Previously, many fake goods entered the Vietnamese market, causing detrimental damages to enterprises of all sizes. With the newly revised LIP, the customs authority is entitled to take the initiative if, during the course of inspection, supervision, and control, they find clear grounds to suspect that exported or imported goods are illegal and counterfeit goods on intellectual property. This helps to improve the efficiency and feasibility of IP protection activities.

In general, Vietnam has joined and signed many international trade agreements whereby the amendment of the LIP has seen additional regulations, such as the content related to trademark protection.

For example, the rights and responsibilities of an enterprise providing intermediary services in the internet and telecommunications network environment, as well as the obligation to proactively suspend customs procedures for imported and exported goods suspected of being counterfeit goods, play an important role in ensuring strict and full enforcement of the international commitments to attract investment and support the protection of intellectual property assets of foreign financiers.

In addition to amending those two major laws, in the spirit of the Law on Supporting Small and Medium Enterprises and Decree No.55/2019/ND-CP on providing legal assistance for this type of enterprises, the Ministry of Transport this year will develop a plan to provide legal assistance to these enterprises.

The plan aims to provide legal information to enterprises; disseminate and foster business law knowledge for enterprise managers; and foster business legal skills and operations. It also wants to ensure the initiative and consistency in the direction, administration, implementation, and coordination of effective implementation of legal support activities for enterprises.

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By Pham Duy Khuong

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